Correlation Between Xtant Medical and Arrow Electronics

Can any of the company-specific risk be diversified away by investing in both Xtant Medical and Arrow Electronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xtant Medical and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtant Medical Holdings and Arrow Electronics, you can compare the effects of market volatilities on Xtant Medical and Arrow Electronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xtant Medical with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtant Medical and Arrow Electronics.

Diversification Opportunities for Xtant Medical and Arrow Electronics

0.77

Correlation Coefficient

Xtant Medical  Arrow Electronics

Poor diversification

The 3 months correlation between Xtant and Arrow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Xtant Medical Holdings and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Xtant Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xtant Medical Holdings are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Xtant Medical i.e., Xtant Medical and Arrow Electronics go up and down completely randomly.

Pair Corralation between Xtant Medical and Arrow Electronics

Given the investment horizon of 90 days Xtant Medical Holdings is expected to under-perform the Arrow Electronics. In addition to that, Xtant Medical is 1.31 times more volatile than Arrow Electronics. It trades about -0.38 of its total potential returns per unit of risk. Arrow Electronics is currently generating about 0.05 per unit of volatility. If you would invest  11,372  in Arrow Electronics on September 20, 2024 and sell it today you would earn a total of  170.00  from holding Arrow Electronics or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Xtant Medical Holdings  vs.  Arrow Electronics

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtant Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Arrow Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Xtant Medical and Arrow Electronics

The main advantage of trading using opposite Xtant Medical and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtant Medical position performs unexpectedly, Arrow Electronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.

The idea behind Xtant Medical Holdings and Arrow Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.